Net incomeattributable to PFG for second quarter 2018
increased 48 percent to $456.6 million, compared to $309.5 million
for second quarter 2017. Net income per diluted share of $1.58 for
second quarter 2018 compared to $1.06 in prior year quarter. The
company benefited from a $99.5 million after-tax gain related to a
sale of an equity method investment.

Non-GAAP operating earnings for second quarter 2018 of $391.4
million,compared to $383.6 million for second quarter
2017. Non-GAAP operating earnings per diluted share (EPS) of $1.35 for
second quarter 2018 compared to $1.31 for second quarter 2017.

Quarterly common stock dividend of $0.53 per share for third
quarter 2018 was authorized by the company’s Board of Directors,
bringing the trailing twelve-month dividend to $2.05 per share, a 13
percent increase compared to the prior year trailing twelve-month
period. The dividend will be payable on Sept. 28, 2018, to
shareholders of record as of Sept. 6, 2018.

“I’m pleased with our results for the quarter and first six months of
the year,” said Dan Houston, chairman, president and CEO of Principal.
“We delivered $391 million of non-GAAP operating earnings in the second
quarter. At $800 million year-to-date, non-GAAP operating earnings are
up 6 percent compared to the first half of 2017, despite some
unfavorable macroeconomic conditions and our accelerated investment in
digital business solutions.”

“We continue to create long-term shareholder value through our balanced
approach to capital deployment,” added Houston. “In the first half of
the year, we’ve returned over $670 million to shareholders through
common stock dividends and share repurchases. Additionally, we’ve
committed $130 million to strategic acquisitions to increase scale and
capabilities in our global businesses. Our recent acquisition of
financial technology company RobustWealth is an important step forward
for Principal as we look to make investment advice more accessible to
customers. RobustWealth provides us a suite of solutions for investment
advisors, including a digital advice platform, goal-based investment
tools, and efficient client onboarding.”

Other second quarter highlights

Strong Morningstar investment performance2, with 83 percent
of Principal’s investment optionsabove median on a
one-year basis, 70 percent on a three-year basis and 86 percent on a
five-year basis.

We continue to execute on our accelerated investment in digital
business strategies as we intensify our focus on the customer
experience, direct-to-consumer offerings and our use of data science
in investment research.

Total company AUM of $666.6 billion with total company net cash flows
of $2.3 billion.

Retirement and Income Solutions (RIS) - Fee sales of $3.1 billion and
net cash flow of $1.2 billion contributed to higher end of period
account values of $229.3 billion, a 9 percent increase over the prior
year quarter.

RIS - Spread sales of $2.1 billion, including fixed annuity sales of
$1.5 billion, helped drive end of period account values to $42.7
billion, a 9 percent increase over the prior year quarter.

Premium and fees decreased $2.2 million as growth in the
business was more than offset by volatility in reinsurance premiums.

Corporate

(in millions except percentages or otherwise noted)

Quarter

Trailing Twelve Months

2Q18

2Q17

% Change

2Q18

2Q17

% Change

Pre-tax operating losses

$

(49.5

)

$

(47.5

)

(4

)%

$

(196.0

)

$

(217.1

)

10

%

Pre-tax operating losses increased $2.0 million; we continue to
expect to be within our guided range of $(190) - $(210) million for
full year 2018.

Forward looking and cautionary statementsCertain statements
made by the company which are not historical facts may be considered
forward-looking statements, including, without limitation, statements as
to non-GAAP operating earnings, net income available to PFG, net cash
flows, realized and unrealized gains and losses, capital and liquidity
positions, sales and earnings trends, and management’s beliefs,
expectations, goals and opinions. The company does not undertake to
update these statements, which are based on a number of assumptions
concerning future conditions that may ultimately prove to be inaccurate.
Future events and their effects on the company may not be those
anticipated, and actual results may differ materially from the results
anticipated in these forward-looking statements. The risks,
uncertainties and factors that could cause or contribute to such
material differences are discussed in the company’s annual report on
Form 10-K for the year ended Dec. 31, 2017, and in the company’s
quarterly report on Form 10-Q for the quarter ended March 31, 2018,
filed by the company with the U.S. Securities and Exchange Commission,
as updated or supplemented from time to time in subsequent filings.
These risks and uncertainties include, without limitation: adverse
capital and credit market conditions may significantly affect the
company’s ability to meet liquidity needs, access to capital and cost of
capital; conditions in the global capital markets and the economy
generally; volatility or declines in the equity, bond or real estate
markets; changes in interest rates or credit spreads or a sustained low
interest rate environment; the company’s investment portfolio is subject
to several risks that may diminish the value of its invested assets and
the investment returns credited to customers; the company’s valuation of
investments and the determination of the amount of allowances and
impairments taken on such investments may include methodologies,
estimations and assumptions that are subject to differing
interpretations; any impairments of or valuation allowances against the
company’s deferred tax assets; the company’s actual experience could
differ significantly from its pricing and reserving assumptions; the
pattern of amortizing the company’s DAC and other actuarial balances on
its universal life-type insurance contracts, participating life
insurance policies and certain investment contracts may change; changes
in laws, regulations or accounting standards; the company may not be
able to protect its intellectual property and may be subject to
infringement claims; the company’s ability to pay stockholder dividends
and meet its obligations may be constrained by the limitations on
dividends Iowa insurance laws impose on Principal Life; litigation and
regulatory investigations; from time to time the company may become
subject to tax audits, tax litigation or similar proceedings, and as a
result it may owe additional taxes, interest and penalties in amounts
that may be material; applicable laws and the company’s certificate of
incorporation and by-laws may discourage takeovers and business
combinations that some stockholders might consider in their best
interests; competition, including from companies that may have greater
financial resources, broader arrays of products, higher ratings and
stronger financial performance; a downgrade in the company’s financial
strength or credit ratings; client terminations, withdrawals or changes
in investor preferences; inability to attract and retain qualified
employees and sales representatives and develop new distribution
sources; an interruption in telecommunication, information technology or
other systems, or a failure to maintain the confidentiality, integrity
or availability of data residing on such systems; international business
risks; fluctuations in foreign currency exchange rates; the company may
need to fund deficiencies in its “Closed Block” assets; the company’s
reinsurers could default on their obligations or increase their rates;
risks arising from acquisitions of businesses; and loss of key vendor
relationships or failure of a vendor to protect information of our
customers or employees.

Use of Non-GAAP financial measuresThe company uses a number
of non-GAAP financial measures that management believes are useful to
investors because they illustrate the performance of normal, ongoing
operations, which is important in understanding and evaluating the
company’s financial condition and results of operations. They are not,
however, a substitute for U.S. GAAP financial measures. Therefore, the
company has provided reconciliations of the non-GAAP measures to the
most directly comparable U.S. GAAP measure at the end of the release.
The company adjusts U.S. GAAP measures for items not directly related toongoing operations. However, it is possible these adjusting items
have occurred in the past and could recur in future reporting periods.
Management also uses non-GAAP measures for goal setting, as a basis for
determining employee and senior management awards and compensation, and
evaluating performance on a basis comparable to that used by investors
and securities analysts.

Earnings conference callOn Friday, Jul. 27, 2018, at 10:00
a.m. (ET), Chairman, President and Chief Executive Officer Dan Houston
and Executive Vice President and Chief Financial Officer Deanna Strable
will lead a discussion of results and the impacts on future prospects,
asset quality and capital adequacy during a live conference call, which
can be accessed as follows:

Via live Internet webcast. Please go to principal.com/investor
at least 10-15 minutes prior to the start of the call to register, and
to download and install any necessary audio software.

Via telephone by dialing 866-427-0175 (U.S. and Canadian callers) or
706-643-7701 (international callers) approximately 10 minutes prior to
the start of the call. The access code is 8249939.

Replay of the earnings call via telephone is available by dialing
855-859-2056 (U.S. and Canadian callers) or 404-537-3406
(international callers). The access code is 8249939. This replay will
be available approximately two hours after the completion of the live
earnings call through the end of day Aug. 3, 2018.

Replay of the earnings call via webcast as well as a transcript of the
call will be available after the call at principal.com/investor.

The company’s financial supplement and slide presentation is currently
available at principal.com/investor,
and may be referred to during the call.

About
Principal®12Principal helps people and
companies around the world build, protect and advance their financial
well-being through retirement, insurance and asset management solutions
that fit their lives. Our employees are passionate about helping clients
of all income and portfolio sizes achieve their goals – offering
innovative ideas, investment expertise and real-life solutions to make
financial progress possible. To find out more, visit us at principal.com.

Management uses non-GAAP operating earnings, which is a financial
measure that excludes the effect of net realized capital gains and
losses, as adjusted, and other after-tax adjustments the company
believes are not indicative of overall operating trends, for goal
setting, as a basis for determining employee and senior management
awards and compensation, and evaluating performance on a basis
comparable to that used by investors and securities analysts. Note: it
is possible these adjusting items have occurred in the past and could
recur in future reporting periods. While these items may be significant
components in understanding and assessing our consolidated financial
performance, management believes the presentation of non-GAAP operating
earnings enhances the understanding of results of operations by
highlighting earnings attributable to the normal, ongoing operations of
the company’s businesses.

Selected Balance Sheet Statistics

Period Ended,

6/30/18

12/31/17

Total assets (in billions)

$

252.1

$

253.9

Stockholders’ equity (in millions)

$

11,706.5

$

12,921.9

Total common equity (in millions)

$

11,639.3

$

12,849.3

Total common equity excluding accumulated other comprehensive income
(AOCI) other than foreign currency translation adjustment (in
millions)

$

11,635.0

$

11,765.3

End of period common shares outstanding (in millions)

284.6

289.0

Book value per common share

$

40.90

$

44.46

Book value per common share excluding AOCI other than foreign
currency translation adjustment

$

40.88

$

40.71

Principal Financial Group, Inc.

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

(in millions, except as indicated)

Period Ended,

6/30/18

12/31/17

Stockholders’ Equity, Excluding AOCI Other Than Foreign Currency
Translation Adjustment, Available to Common Stockholders:

Stockholders’ equity

$

11,706.5

$

12,921.9

Noncontrolling interest

(67.2

)

(72.6

)

Stockholders’ equity available to common stockholders

11,639.3

12,849.3

Net unrealized capital (gains) losses

(438.8

)

(1,455.1

)

Net unrecognized postretirement benefit obligation

434.5

371.1

Stockholders’ equity, excluding AOCI other than foreign currency
translation adjustment, available to common stockholders

$

11,635.0

$

11,765.3

Book Value Per Common Share, Excluding AOCI Other Than Foreign
Currency Translation Adjustment:

Book value per common share

$

40.90

$

44.46

Net unrealized capital (gains) losses

(1.55

)

(5.03

)

Net unrecognized postretirement benefit obligation

1.53

1.28

Book value per common share, excluding AOCI other than foreign
currency translation adjustment

$

40.88

$

40.71

Principal Financial Group, Inc.

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

(in millions)

Three Months Ended,

Trailing Twelve Months,

6/30/18

6/30/17

6/30/18

6/30/17

Income Taxes:

Total GAAP income taxes (benefits)

$

55.9

$

50.8

$

(73.1

)

$

197.6

Net realized capital gains (losses) tax adjustments

16.6

39.6

(239.4

)

76.1

Tax benefit related to other after-tax adjustments

-

-

594.5

34.4

Income taxes related to equity method investments and noncontrolling
interest

3 The company has provided reconciliations of the non-GAAP
measures to the most directly comparable U.S. GAAP measures at the end
of the release. The company has determined this measure is more
representative of underlying operating revenues growth for PGI as it
removes commissions that are collected through fee revenue and passed
through expenses with no impact to pre-tax operating earnings.

4 Premium and fees = premiums and other considerations plus
fees and other revenues.

8 Variable investment income includes certain types of
investment returns such as prepayment fees and income (loss) from
certain elements of our alternative asset classes, including results of
value-add real estate sales activity.

10 Combined net revenue: net revenue for all Principal
International companies at 100% less pass-through commissions. Prior to
1Q 2018, pass-through commissions were not excluded from this
definition. The company has determined combined net revenue (at PFG
share) is more representative of underlying net revenue growth for
Principal International as it reflects our proportionate share of
consolidated and equity method subsidiaries. In addition, using this net
revenue metric provides a more meaningful representation of our profit
margins. net revenue (at PFG share)